Commonwealth trade has its roots in the historical relationships between Britain and other members of the Commonwealth when they provided the raw materials and Britain the manufactured goods. Commonwealth tariff preferences arose in the collapse of the world economy after 1929, as a defensive measure intended to shield Commonwealth countries from the rising tide of protectionism that world trade faced at the time.

After a sharp check in 1967, when the slowdown of the West German and American economies contributed towards reducing the rate of growth of world trade to about 5 per cent, the rate rose to over 11 per cent in 1968. Not since 1951, when the U.S. gross national product grew by an exceptional 15 per cent as a result of the Korean war, did imports into the United States advance so rapidly. In the United Kingdom, the demand for imported goods showed little sign of satiety in spite of devaluation, high interest rates and successive restrictive measures.

The three main components of intra-Commonwealth trade, have been the exports of Commonwealth countries to Britain, the imports of British goods by these same countries, and the cross trade of Commonwealth countries other than Britain with one another. This last segment has often been influenced by historical relationships or geographic propinquity. For example, the trade of Commonwealth Caribbean countries with each other and with Canada arose out of the British connection and the natural complementarity of the trade in sugar and other tropical products in one direction against forest products, salt fish etc., in the other direction.